Inclusive Finance: A call to action

14 June 2024 | Gilly Challinor
A call to action: putting inclusive finance at the heart of Jersey’s climate response 

I’m pitching this blog to members of our sustainable finance community as well as more broadly, so I’m going to try and cut out the jargon and use relatable ideas to try and be as inclusive as possible. I don't want to assume everyone knows what I mean when I talk about ‘inclusive finance’ so I will start there. There are loads of definitions, and some people will call it ‘financial inclusion’ - it doesn’t really matter too much. But what it means is that financial products and services like savings, lending, insurance, credit and payments should be available, useful and affordable to everyone everywhere 

If you’re a woman who lives in rural Malawi, access to financial services means that you can buy books and uniforms for your children because you have savings, or you can buy seeds and fertiliser on credit, or you can receive emergency money from the government when the cyclone damages your home. It could also mean that you can get a start-up loan for your electric bike battery exchange business using the local solar power coming from the mini grid that’s been built in your community. That is a real example that I heard this week and demonstrates quite clearly what sustainable development and economic empowerment mean practically. 

I’m simplifying, but my point is that ‘inclusive finance’ is not only an enabler of sustainable development, but is a critical pathway to achieving poverty reduction, climate resilience and low carbon outcomes. 

Why am I saying all this? This week I’ve been at a global ‘inclusive finance’ conference hosted by the World Bank’s CGAP, attended by senior experts from 63 of the biggest, most influential financial inclusion institutions in the world.  Organisations like the Bill and Melinda Gates Foundation, the African Development Bank, BII, USAID, United Nations, FCDO, SIDA, NORAD, GIZ, impact investors, fintechs, insurance companies and many many others all represented. 

I found myself asking, where does JOA fit in this ecosystem of giants? But Jersey is uniquely positioned to impact global poverty reduction and climate goals. Our impact is disproportionately high in comparison to our population and overseas aid budget. We are incredibly fortunate to have all the magic ingredients (a strategic aid agency, thriving digital and finance industries, growing number of investors interested in impact etc) – but it’s imperative that we combine these ingredients and follow the right recipe to create the perfect impact-pie (awful - sorry!). 

A clear call to action 

This year’s annual meeting saw panel discussions and conversations that put the climate agenda at the heart of financial inclusion. People living in extreme poverty are those who are suffering the effects of climate change the most. I’ve seen with my own eyes the aftermath of Cyclone Freddy in Malawi, and in Zambia where the government has recently declared a climate emergency. Unless we urgently address this injustice, we will not be successful in either alleviating poverty or reaching our carbon goals. 

Inclusive finance helps people living in the poorest countries in the world be financially resilient in times of crisis. Government payments, loans, insurance and savings can all help people bounce back after a climate shock – for example, when the cyclone destroys an entire crop season, or the floods contaminate the drinking water. There are a number of building blocks that are needed – technology, connectivity, data, financial literacy, policy and regulation as examples. These are well understood and well-documented and there are plenty of best practice use cases all around the world. 

To achieve a ‘just transition’ to net zero, it’s very clear that we cannot do it without addressing the needs of those living in extreme poverty in those most climate vulnerable communities in the world.  

We also cannot expect people living in these low-income countries to pay the premium for clean and green technologies like solar, electric transport and eco-friendly cookstoves. Fortunately, there are plenty of examples of affordable, sustainable green solutions whose long-term costs are lower than their brown alternatives and provide a decent return on investment. And I’m certain that the Jersey community of innovators, investors and finance experts can together overcome the barriers to investing in climate-vulnerable markets.  

Putting Inclusive Finance at the heart of Jersey’s approach to climate action and the SDGs. 

As the global CGAP network has shown me this week, to increase our impact when it comes to poverty reduction and the climate crisis, we need to coordinate and focus our efforts towards the same north star. Which got me thinking - what if inclusive finance was at the heart of Jersey’s Sustainable Finance strategy? What if Jersey's public, private and philanthropic sectors all had inclusive finance as their north star? Perhaps that could really move the needle towards achieving the SDG targets and take Jersey’s reputation as an IFC to another level of excellence. 

If I haven’t managed to convince you, here are 8 billion more reasons to keep talking about inclusive finance: 

8 Billion Reasons: Inclusive Finance as a Catalyst for Climate Action | CGAP Research & Publications 

And for the impact investors out there, here’s another research paper that you might find interesting: 

Investor Roadmap for Inclusive Green Growth | CGAP Research & Publications 


Jersey’s strategic advantage 

  • JOA has a clear strategic and targeted approach. I can’t stress enough how critical it is for achieving meaningful and lasting impact. JOA focuses our development programming on six countries (see the Boas formula on page 16):  Ethiopia, Malawi, Zambia, Rwanda, Sierra Leone and Nepal. Fewer countries means that we can understand the nuanced differences between Sierra Leone’s National Financial Inclusion Strategy and Ethiopia’s. We know where the risks are and the landscape of banks and financial structures that the countries have in place. 

  • JOA has fewer degrees of separation between donor (that’s us) and implementor (that’s the institution or the charity that we fund overseas who does the work) – we can develop personal relationships with banks, fintechs, charities, social enterprises and facilitate useful introductions. We can facilitate and exchange learnings and best practices to avoid duplication and repeat mistakes.

  • JOA is agile and responsive – we are a small team and can act quickly. We can be responsive to change. Anyone working in the digital, data and tech world knows that being agile is critical for success. 

  • The force multiplier effect – JOA crowds in other funders by piloting solutions and proving concepts. We can combine efforts and join forces with major international donors to scale their impact. 
  • Financial services expertise – I can’t shout loudly enough about Jersey’s incredible financial sector, our regulatory environment, and our reputation as an IFC of excellence. I heard this week that Jersey is the jurisdiction of choice for SPV's (please don’t ask me to explain those, but they are enabling some very exciting ‘climate finance’ solutions as I understand it).  

About JOA’s financial inclusion programmes 

JOA’s portfolio of 16 ongoing Financial Inclusion projects span all six target countries and supports over 397,859 direct beneficiaries, the majority of whom are women. Four new projects started in 2023, including Opportunity International’s ‘Inclusive Finance for Agricultural Value Chains in Rwanda’, Habitat for Humanity’s ‘CASH: Creating Access to Safe Housing - Building Financial Inclusion and Resilience for Women in Zambia’ and Restless Development International’s ‘Ulemelero - Live Well for Women’s Empowerment in Zambia’. Toronto Centre also started working with the Bank of Sierra Leone, meaning that their regulatory training programmes are now active in all six of JOA’s target countries. More information can be found here.